Megha Engineering Seeks $700 Million Private Credit for 43% Stake Buyout

PV Krishna Reddy, managing director and controlling shareholder of India’s Megha Engineering & Infrastructures Ltd., is seeking about $700 million from private credit investors to finance the acquisition of his uncle’s 43% stake, potentially creating one of India’s largest alternative-lending transactions of 2026.

Krishna Reddy currently owns 57% of the Hyderabad-based infrastructure group and is seeking financing to acquire the remaining stake held by his uncle, executive chairman Pamireddy Pitchi Reddy, according to reports citing people familiar with the discussions. The proposed transaction would consolidate ownership of Megha Engineering under Krishna Reddy if completed.

A lender group including Davidson Kempner Capital Management, Elham Credit Partners and Värde Partners has begun preliminary work on a potential financing structure. Terms have not been finalized, and the discussions could change, according to the reports.

The financing would put Megha’s shareholder transaction into the upper tier of India’s private credit market at a time when acquisition financing and holding-company loans are becoming increasingly important sources of deployment for alternative lenders.

Large deal would stand out in India’s 2026 credit market

At $700 million, the proposed financing would equal about one-fifth of all private credit investment tracked in India during the first six months of 2026.

EY recorded $3.5 billion of private credit investment across 102 Indian transactions exceeding $10 million in the first half, broadly matching $3.4 billion in the second half of 2025. The first-half figure was substantially below the $9 billion recorded a year earlier, although the 2025 comparison was inflated by a $3.1 billion Shapoorji Pallonji Group refinancing.

According to the EY India private credit market update, domestic funds supplied 74% of deal value and approximately 79% of deal volume in the first half. Refinancing, holding-company financing and acquisition funding remained important sources of demand.

The proposed Megha transaction is notable because it could bring a group of international credit investors into a deal substantially larger than the mid-market transactions that dominated Indian deployment earlier this year. Deals between $10 million and $60 million accounted for 61% of first-half private credit value, while transactions above $120 million represented only 18%, EY said.

Large private credit packages have increasingly competed with bank and syndicated financing for complex transactions because lenders can customize leverage, collateral, covenants and repayment structures. PE NEWSWIRE has tracked the same financing dynamic in other markets, including KSL Capital’s $2.6 billion Invited Clubs acquisition backed by more than $1.7 billion of private credit.

Megha financing centers on shareholder liquidity

The contemplated borrowing differs from a conventional sponsor-backed leveraged buyout because the proceeds would support an ownership consolidation inside an existing privately held infrastructure group.

That distinction matters for lenders. A financing package for a shareholder purchase can require underwriting not only the operating company’s cash generation and leverage capacity, but also the legal location of the debt, collateral arrangements and the mechanism through which operating cash ultimately services acquisition-related obligations.

No pricing, maturity, security package or final borrowing structure has been disclosed for the proposed Megha financing. The discussions therefore remain preliminary, and the reported $700 million amount should not be treated as a completed debt transaction.

Krishna Reddy has more than three decades of infrastructure-sector experience and serves as managing director of Megha Engineering. An Olectra Greentech board profile of PV Krishna Reddy identifies him as Megha Engineering’s managing director and describes his involvement across infrastructure, energy, hydrocarbons, water and defense.

Megha traces its roots to a fabrication business established in 1989 and has expanded across water management, engineering and construction, transportation, hydrocarbons, power, manufacturing and other infrastructure activities.

Private credit fills acquisition-financing gaps

The transaction would also illustrate how India’s private debt market is expanding beyond traditional refinancing and stressed-credit opportunities.

EY said acquisition financing, growth capital, refinancing and special situations are all contributing to private credit demand. Its June 2026 survey found 73% of respondents expected Indian private credit activity to remain strong over the following one to two years.

The market is developing within a broader Asian expansion of private lending. Asia-Pacific still represents a relatively small portion of global private credit, but institutional investors have been increasing allocations as managers seek opportunities in asset-backed, infrastructure and corporate lending. Preqin expects Asia-Pacific private credit assets under management to reach $142 billion by 2030, according to Reuters.

Competition with banks remains an important part of that expansion. In markets where syndicated financing is readily available, banks can offer materially cheaper funding, while private lenders compete through speed, execution certainty and customized structures. PE NEWSWIRE previously examined that trade-off as borrowers shifted some financings from private credit toward cheaper bank-led loans.

For Megha Engineering, the attraction of private credit is therefore likely to depend less on headline borrowing cost alone than on whether lenders can construct a financing package suitable for a large private-company shareholder transaction.

If Krishna Reddy completes the proposed $700 million financing and 43% stake acquisition, the deal would provide another large-scale test of international private credit managers’ willingness to deploy capital into India’s family-owned corporate sector — and of borrowers’ willingness to pay for the structural flexibility that private lenders can provide.